top of page
  • Writer's pictureJoseph Blogna

Expense payment fringe benefits guide for small business employers

If you are an employer and you pay or reimburse your employees’ expenses, you may be providing an expense payment fringe benefit. Employers that provide these benefits must pay fringe benefits tax (FBT). FBT is separate to other taxes, such as income tax or goods and services tax (GST).


Key points

  • ƒ Work out if you are providing an expense payment fringe benefit

  • ƒ Exemptions – expense payment benefits exemptions

  • ƒ Calculate your FBT

  • ƒ Keep records

What are expense payment fringe benefits

Expense payment fringe benefits may arise when an employee incurs expenses and the employer either:

  • reimburses them for the expense, or

  • directly pays a third-party for the expense.

The expense needs to be incurred by the employee and can be a business or private expense, or a combination of both. Expense payment fringe benefits may also arise when expense payment benefits are provided to an associate of the employee.


Benefits

Expense payment fringe benefits may include the payment or reimbursement of:

  1. car expenses (e.g. registration and insurance)

  2. car parking (if you do not provide the car parking facilities)

  3. home mortgage

  4. home/desktop computer, home telephone and internet

  5. employee personal credit card payments

  6. health insurance premiums self-education expenses

Not a Benefit The following are not fringe benefits:

  1. salaries and wages

  2. employer contributions to complying superannuation funds

  3. employer termination payments

  4. shares purchased under approved employee share acquisition schemes

  5. payments of dividend amounts

  6. benefits provided to volunteers and contractors

  7. cash bonuses

  8. exempt benefits, such as certain benefits provided by religious institutions to their religious practitioners.

Exemptions There are exemptions for expense payment benefits. Common exemptions include:

  • portable electronic devices – if the items are primarily for use in the employee’s employment.

  • computer software

  • protective clothing

  • briefcases

  • tools of trade

  • taxi or ride-share travel

Keep records You must keep certain records to support any claims and calculations you make. Records you will need to keep will depend on the type of expense payment fringe benefit. Records must show the taxable value of each fringe benefit provided to each employee.


The above information has been taken from the ATO website. For more information Click Here

6 views0 comments
bottom of page